3 Ways to start growing your CPF
Another year older, another year wiser. Not to forget, every one of us is also a year closer to our retirement age. As you edge closer towards your retirement age, have you ever wondered if you are taking one step towards the retirement lifestyle that you want? In particular, have you started growing your CPF so that you can afford the retirement lifestyle that you yearn for? Well, if you haven’t started thinking about that, now is a good time to start growing your CPF from 2020 onwards.
Want to retire with ease? Make sure to start planning for your retirement early with the best retirement plans.
Keep It Intact And Let It Grow
One of the simplest things you can do to grow your CPF money is to just do nothing, literally. That’s because by default CPF provides a 2.5% return on the money in your Ordinary Account (OA) and 4.0% on the money in Special Account (SA). So, by just letting your money sit inside CPF without doing anything will yield you up to 4.0% return. But just because you can get up to 4.0% return, it doesn’t mean that’s the best way of growing your CPF money.
Top Up Your SA
As Singaporeans & PR, you are eligible for up to $7,000 if you were to top up your own SA. Topping up your SA early in life is immensely rewarding later on. E.g. if you were to top up 7,000 and compound it at a 4% growth rate each year for 20 years, you would have accumulated $15,337, pretty good for doing nothing to it.
While if you were to top up $7,000 consistently for the next 20 years, you will accumulate around $230,000 base on a 4% p.a. growth. There is no free lunch they say.
Invest In Shares, Unit Trusts Or ETFs
For those who are young or have a larger risk appetite, the return from single premium insurance product might not entice you. Instead, you are looking for products with higher investment returns to grow your CPF money at a faster pace.
If you are one of them, you can definitely check out how to invest in shares or Real Estate Investment Trusts (REITs) with your CPF OA. While such investments offer higher investment returns, it also requires more time and effort from you to do your own due diligence. Plus, there is also the risk of making the decision to buy the wrong shares or REITs, leading to paper or real loss.
So, if you prefer to be invested with the expertise of professionals who knows the market better, you can also opt to invest your CPF money in unit trusts or exchange traded funds (ETFs). Both of these investment products pool investors’ money together and invest the money based on the unit trust/ETF’s investment mandate. For example, the unit trust/ETF can focus on specific geographic region (e.g. US) or specific sectors (e.g. technology, healthcare) or even investment type (e.g. bond, gold).
Are You On The Right Track For Retirement?
As you explore different ways to grow your CPF money, make sure not to forget about tracking the status of your retirement plan. It is important not only to let your CPF money work hard for you, but it is also important for you to track whether you are on track for retirement based on your current retirement strategy. Make sure to do your own self-check here to assess how well prepared you are for retirement in years to come.